Presidency uncovers Ghc63M bonded warehouse fraud

Three operators of bonded warehouses in Ghana have been busted for fraud amounting to Ghc63, 217,172.

Investigations by the Special Operations Unit (SOU) at the Office of the President, headed by the Chief of Staff, uncovered the “fraudulent activities with regards to re-exportation of goods” by the warehouses in question.

Re-exportation is the process by which goods are exported normally to neighbouring countries, after the goods have been imported into Ghana.

Under Ghana’s bonded warehouse regime, companies are required to make declarations in the Ghana Customs Management System using the re-exportation code (37). Also, companies engaged in re-exportation are also required to list the vehicles used in the transaction in the system.

The probe spanned 2009 and 2010, according the SOU's report intercepted by StarrFMonline.com.

The Unit, tasked by President John Mahama to identify leakages and loopholes in the revenue collection regimes, plug such leakages and recommend strategies for minimising revenue losses to the State, said: “In-depth investigation over the past few months into the fraudulent re-exportation of goods in the Customs Management Ghana System shows that since 2009, some bonded warehouse operators have been engaged in fraudulent declarations that allow them to evade payment of duty.”

The correspondence, dated August 7, 2014, recommended that: “Defaulting companies must pay the Ghc63,217,172 owed the State by the end of August 2014.”

According to the report, the SOU found it necessary to probe the companies because “for some time now, there has been some disquiet about fraudulent practices in the operations of the bonded warehouse regime in Ghana.”

It said: “Apart from the payment of duties and taxes way outside the time limit allowed by law, which was reported in the media over the past few months, one critical area of fraud is in the re-exportation of goods imported into the country.”

“The fraud takes place when companies deliberately make false declarations by ‘over-loading vehicles with weight. The SOU, therefore, set out to investigate declarations made by various companies in respect of re-exportation,” the Unit noted in its report.

Below are the methodology, processes of the investigations and the findings of the Unit as captured in the report.

METHODOLOGY

The SOU established a number of indicators which it used in determining whether or not “overloading” had taken place. These include the following:

a. Date on which re-exportation declaration was made.

b. Description of items leaving the warehouse.

c. Registration numbers of vehicles to covey the goods.

d. Maximum weight limit for each vehicle as defined by the DVLA and/or Ghana Highways Authority.

e. Total weight of goods cleared in the system.

f. Total weight of goods carried by the vehicles listed in the declaration.

g. The difference between what was cleared and what was actually carried by the vehicles.

h. The CIF value of the goods cleared in the system.

i. The ratio of CIF of goods which could not have been re-exported.

j. The estimated duty lost due to the diversion onto the local market.

THE INVESTIGATION

a. A list of all locally registered vehicles listed as having been used in the re-exportation was sent to the DVLA for official confirmation of the weight limit for each vehicle.

b. The Ghana Highway Authority was also asked to advise on the weight limit for foreign registered vehicles. The maximum weight allowed in 2009 was given as 51 metric tons.

FINDINGS

a. Knowing the regulations governing the transportation of goods across the sub-region, one can conclude that the extra loads were diverted onto the local market.

b. The extra weight recorded in each transaction represented the consignment which could not have been re-exported. Since the consignment had been “written off” in the system the conclusion is that the “overloading” was deliberate and meant to evade payment of duty on the extra goods which were dumped onto the local market.

THE LAW RELATING TO FALSICATION OF DOCUMENTS

It is an offence under Section 249 of the Customs, Excise & Preventive Service (Management) Law, 1993 to make a false declaration. The law states that:

(1) If any person either knowingly or recklessly—

(a) makes or signs or causes to be made or to besigned, so delivers or causes to be delivered to the Commissioner or an officer, any declaration, notice, certificate or other document whatsoever; or

(b) makes any statement in answer to any question put to him by an officer, acting in the execution of his duty; being a document or statement produced or made for any purpose or any assigned matter, which is untrue in any material particular, he shall be guilty of an offence under this subsection and may be detained; and any goods in relation to which the document or statement was made shall be forfeited.

(2) If any person in any matter relating to this Law—

(a) makes and signs or causes to be made and signed any false declaration or any declaration certificate or other instrument required to be verified by signature only, which is false in any material particular; or

(c) refuses to answer any question put to him by any officer acting in the execution of his duty; shall be guilty of an offence under this subsection and may be detained; and any goods in respect of which the offence was committed shall be forfeited.

(2) Where by reason of the offence specified in subsection (1) or (2) the full amount of any duty payable is not paid, the offending person—

(a) shall incur a penalty not exceeding three times the amount not paid in addition to forfeiture of the goods; or

(b) the offending person shall be liable on conviction, to imprisonment for a term not exceeding one year or both.